City will seek bids for its IT tasks

San Diego 
A 30-year-old city-owned agency will have to fight for its survival as Mayor Jerry Sanders plans to split up its duties and allow outside companies to bid on them, beginning tomorrow.

The San Diego Data Processing Corp. and its 250 employees have handled the city's communications and technology services since 1979, and the city pays the nonprofit about $45 million annually.

Sanders said the agency has long needed some competition to make sure that taxpayers are getting the most for their money.

“Nothing's been done with DPC for 30 years, so this is a start to make sure we're getting the best service at the lowest possible price,” Sanders said.

The city will begin seeking bids tomorrow for a portion of the work performed by the Data Processing Corp. — the first phase of a three-year plan to make sure its work is competitively priced. The initial bid will be to provide a help desk and computer support, which cost the city a combined $2.7 million annually.

The plan is to get a contract in place by July 1, when the next fiscal year begins. The second phase, set to begin in the spring, will cover the city's telephone system, which costs about $2.6 million annually. Bids for other work, such as operating the city's data center and network, will soon follow.

Sanders said dismantling the Data Processing Corp. isn't his goal, but that could be the end result. He said it's possible the agency will be able keep the contracts if it offers the best deal.

Calls made since Friday to Tom Fleming, the agency's president and chief executive, and to the corporation's board members have not been returned.

Sanders worked to get voters in November 2006 to approve managed competition — allowing outside companies to compete with city workers for government jobs — but his efforts have been stymied by employee unions and a labor-backed City Council majority.

Because the Data Processing Corp. doesn't employ union workers, Sanders hopes to avoid political opposition. The agency was created specifically to skirt city rules on pay.

In the late 1970s, the city had difficulty retaining tech employees because they could easily find higher-paying jobs in the private sector. The landscape has changed since then because of technological advances and the emergence of a generation of tech-savvy workers.

The Data Processing Corp. drew criticism earlier this year from the Mayor's Office for budgeting $600,000 in raises and bonuses for its employees when city employees were being asked to take a 6 percent reduction in pay and benefits. A city audit later found no wrongdoing by agency officials but chastised them for failing to document in detail how the bonuses were tied to performance.

The agency also came under fire in 2004 when an audit showed senior managers racked up sizable tabs for alcoholic drinks and entertainment over the years. One bill had 13 tequila shots at $25 each and two bottles of wine at $121 each. The chief executive officer later resigned.

The city provides about 90 percent of the agency's revenue, and it has smaller contracts with the county Sheriff's Department and the city's pension system, city officials said. The nonprofit is run by a six-member board that consists of volunteers the council appoints.

The county has outsourced its computer and telecommunications services since 1999 and, in 2005, inked a seven-year deal with Virginia-based Northrop Grumman Information Technology Inc. for $667 million.

Nader Tirandazi, the city's financial management director, said the city doesn't have a savings goal it is trying to reach, but a 10 percent reduction in costs would save about $4.5 million annually.

“I would be more than happy to take that because I would need that for next year,” he said. “It's not really about the lowest cost. It's the value of service at a reasonable cost.”

The city's budget deficit next year is expected to top $100 million, so any savings would help.

Lani Lutar, president of the San Diego County Taxpayers Association, said her group strongly supports the mayor's plan to create competition and lower costs.

“The beauty of competitive bidding is that the current provider may end up submitting a bid for lower cost out of a presumption that other providers may come in lower,” Lutar said. “In trying to keep the contract, they could look at their operations and make it as lean and mean as it can be.”